I just want all you guys to know that you're scaring the heck out of me. I don't understand ninety percent of what you're talking about; I can barely load my ipod.
I'm no techno geek either, but have a pretty good grasp on how it all works. Maybe I could put it into terms that are easier to understand. Anyone with a more in-depth understanding can feel free to correct my metaphor:
Think of iTunes, the program itself, as the central office in the big building that is your internal hard drive. This particular office has a fairly narrow, singular task; to keep track of all the music files. In the office, for the sake of simplicity, is a big address book, an underpaid devoted employee (probably from India), and a telephone. The job of this office is to store the music, given, the resources/space made available to it, and to keep track of exactly where it has stored that music. No music (the big files) is necessarily kept in the office itself, though they do have a back room they can use (the iTunes music folder)...only the address of where the music was stored, and what that music actually is (much smaller files). So you phone up the itunes receptionist, and let him know you have some new music you want to store. The receptionist asks where you want to store it, and you say in the external hard drive that happens to be connected at that time to your computer via USB, for instance. "I'll get right on that," responds the receptionist, "how would you like me to store that?" In the preferences you should have selected the appropriate dropdown that tells the office just what format to store the information in (ie compressed formats like mp3 or uncompressed like .wav or Apple Lossless). So the office goes about taking the music you give it, converts it into the format you've assigned, tagging it with the information available to the office at the time (with an Internet link the receptionist can phone in and get all the title and track information from most CD's, without an Internet connection you will have to tell the office exactly what those are, which is a time-consuming PITA), and stores it, NOT in the office in this case (though that back room is always available), but off in the external hard drive you told it to. It records in its huge address book (you may call this the iTunes Library), all the pertinent information about where it put that music, and what that music is. Next day you have some more music for the office to file, but you don't have your USB hard drive plugged in. You insert a CD with music (phone up the receptionist again)and say, "here's some more music I want stored, but since I don't have my hard drive I'd like you to put this stuff somewhere else in the building (that is your internal hard drive), or perhaps you have another hard drive and you tell it to put it there. "Got it, " comes the response, and iTunes converts the music again, records the information in the big address book (library), including that is stored in this other location, as well as what tags it should look for when it searches there, and Viola, more music is stored. When you phone in the office (iTunes) to ask it to play back the music you stored, the receptionist frantically flips through his highly organized address book for that Yani CD you asked for. Ah, Yani's Greatest Hits (there's an oxymoron) should be in hard drive "A" and was tagged uniquely by iTunes with a big red sticker that says "01101101000010101000011010010". So iTunes goes looking for that external drive (if it is not plugged in iTunes will tell you it cannot find the illusive Yani CD, and ask if you would point it out yourself since you didn't plug the friggen hard drive in). If, on the other hand, it finds that hard drive, it looks for the big red sticker with the "01101101000010101000011010010" on it, finds it, and delivers the goods. As you can see, you can store music on any number of hard drives and other storage devices. iTunes (the program) will keep track of as many as you choose and will continue to find the music for you as long as the device the music is on is actually plugged in (available). You can also, of course, store the music on your internal hard drive...there's even a devoted folder (that back room in the office I mentioned) in the iTunes office in case you actually want to store your music in the office itself (this is the default folder which iTunes will use if either you have not asked it to store the music elsewhere, OR if you've asked it to store music on a device that is not connected to the computer). The real job of iTunes is just in keeping track of where you tell it to put the actual music (it does this by attaching informational tags to the files), and finding it again when you ask for it. I believe, in techno-geek terms, it is what is known as a database. So using your iTunes Preferences is where you get the control over exactly where the music is stored, and in what format (under "Advanced").
Hope that helps.
Marco
